within which MNCs compete. As discussed earlier, particularly relevant to MNC
strategic decisions regarding FDI and the diVusion of preferred HRM policies and
practices are diVerences in the labor markets, workplace cultures, collective bar-
gaining contexts, and related laws across countries. These location diVerences are
all products of IR systems that have evolved uniquely out of the broader environ-
mental contexts of countries.
Beyond being responsive to diVerences in IR systems and complying with
employment laws, looming large over the strategic decision-making of MNCs are
increasing demands to act as socially responsible corporate citizens both abroad
and at home. At the forefront of widespread public debate about corporate social
responsibility, along with environmental concerns, are employment and workplace
concerns; namely about improving labor standards and minimizing the loss of
good-paying jobs as MNCs from highly industrialized countries increasingly shift
investment and outsource work to low-wage developing countries. Although any
synthesis of the literature regarding these employment and workplace issues is well
beyond the intended scope of this chapter, the issues at hand are surely pertinent to
the formulation of global HR strategies. Towards at least sketching out the funda-
mental strategic decision-making required of MNCs, we can draw on a broader
literature about corporate social responsibility (CSR).
The concept or deWnition of CSR has been treated diVerently by authors but, in
general, we can think of CSR as a company’s actions providing some greater social
good than a company would provide otherwise were it not to take into account the
social interests of key societal stakeholders. As conceptualized by McWilliams and
Siegel ( 2001 ), for example, companies should make decisions about CSR just as
they make any investment decision; that is, with expectations of returns. ‘To
maximize proWt, theWrm should oVer precisely that level of CSR for which the
increased revenue (from increased demand) equals the higher cost (of using
resources to provide CSR). By doing so, theWrm meets the demands of relevant
stakeholders—both those that demand CSR (consumers, employees, community)
and those that ‘‘own’’ theWrm (shareholders)’ (McWilliams and Siegel 2001 : 125 ).
In their recent review and meta-analysis of the empirical literature, Orlitzky et al.
( 2003 ) add that attention to CSR has generally resulted in positive Wnancial
performance for companies that have largely responded to the damage incurred
to their reputations by not acting socially responsibly.
With respect to global HR strategies, the question at hand for MNCs is how to
address the calls by labor and human rights NGOs, unions, other citizen interests
groups, investors, the media, and the public at large to act more socially respon-
sibly in regard to labor standards and the shedding of workers associated with
FDI and the movement of work to low-wage countries. Following the logic and
evidence in the CSR literature, to the degree that customers, prospective employees,
and investors are inXuenced negatively by a MNC’s reputation regarding labor
standards and displacement of workers, global HR strategies should be adjusted
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